High prices, ravenous bots: Ticket-scalping thrives despite FTC effort

Originally published in Times Union on .

In August 2016, after “Hamilton” won over a dozen Tony Awards following its Broadway debut, its creator Lin-Manuel Miranda was concerned. The show was sold out for six months and tickets were being offered on the secondary market for thousands more than their original price by scalpers who had used automated “bots” to snatch them up.

During a news conference in midtown Manhattan, U.S. Sen. Charles E. Schumer stood beside Miranda and touted federal legislation he helped craft to address the problem. Schumer, who would not become Senate majority leader for another five years, said his solution for the underground resellers using technology to grab up hordes of tickets was to make them pay hefty fines.

“That will put them out of business,” he told reporters.

The Better Online Ticket Sales Act, or BOTS Act, was approved months later by Congress and signed into law by President Barack Obama, banning people from circumventing security measures that limit the number of tickets customers can buy. With the Federal Trade Commission (FTC) possessing the power to seek penalties against violators, including the potential fines Schumer had cited at the Manhattan news conference, the law charged the federal agency with enforcing those rules.

But nearly eight years later, the FTC has settled just one case using that law and won’t publicly explain its apparent lack of enforcement of the statute.

The gap in policing scalper bots comes as many of those operators have continued using technology to help them circumvent measures designed to thwart their ability to purchase tickets in large numbers. The fallout for the average consumer is that they’re often left scrambling to find decent face-value tickets for live entertainment ranging from concerts and theater productions to major sporting events.

Officials with the FTC declined requests to be interviewed for this story. Records obtained by the Times Union show the agency has resolved just one ticket case under the law, with its staff saying they have fielded about 97 complaints since 2018. 

The public’s frustration with needing to pay exorbitant prices in the secondary market boiled over two years ago when Ticketmaster executives blamed a massive bot attack for crashing its website as tickets went on sale for Taylor Swift’s Eras Tour, leaving countless fans unable to use their presale codes to make purchases. But resale tickets were offered on secondary sites almost immediately, many for more than 50 times their face value.

The debacle prompted a congressional investigation and the pop superstar could only lament on social media days after the website crash about “trying to figure out how this situation can be improved moving forward.”

More than 25 states, as well as Puerto Rico, responded to the Taylor Swift ticketing meltdown by introducing legislation to try and rein in the problem. New Jersey and Hawaii focused on targeting the use of electronic bots by scalpers.

The nine bills enacted by states included new laws in Virginia and Utah banning fraudulent ticket resale websites; a statute enacted in Maine required ticket resellers to refund customers who unknowingly present counterfeit tickets.

Eight years ago, when Schumer announced passage of the legislation that would create the BOTS Act, he noted that the scalpers had “gotten completely out of control and their dominance in the market is denying countless fans access to shows, concerts, and sporting events and driving prices through the roof.”

“With this soon to be new law that will eliminate ‘bots’ and slap hackers with a hefty fine, we can now ensure those who want to attend shows in the future will not have to pay outrageous, unfair prices,” Schumer added.

In a statement, he said the industry needs to do a better job policing itself and the FTC needs to step up its enforcement.

Schumer’s office also shared a letter he sent to FTC Chair Lina Khan in April — months after the Times Union posed questions about the issue to the senator’s office — asking about the law’s single enforcement action and expressing concerns that the agency hasn’t “effectively exercised its authority” under the law.

Schumer and other supporters of the BOTS Act have introduced legislation to update the law. However, those bills are stalled at the committee level. Among them is a measure that would expand the BOTS Act to address scalpers reselling hard-to-get holiday toys; it was reintroduced last year by Schumer, Sen. Richard Blumenthal, a Democrat from Connecticut, and U.S. Rep. Paul Tonko, D-Amsterdam.

Tonko, whose district includes most of the Capital Region, wrote a letter accompanying the toy bill — called the Stopping Grinch Bots Act — to the FTC chair praising the agency for its “continued commitment to protect consumers on the internet, including through enforcement of the 2016 BOTS Act,” among other issues.

When asked why lawmakers are seeking to expand a law that has seen little enforcement, Tonko told the Times Union that they weren’t previously “focused” on its limited success.

“But now, of course, we would want to incorporate any improvements,” the congressman said.

U.S. Sen. Marsha Blackburn of Tennessee, another sponsor of the 2016 BOTS Act, has proposed another bill, the MAIN Event Ticketing Act, that would mandate ticketing companies report bot attacks to the FTC. That legislation, which was introduced with Democratic Sen. Ben Ray Luján of New Mexico, is in part in response to claims by FTC officials that ticketing companies are not reporting bot attacks to their agency. That legislation is pending.

Two years ago, in the wake of the Taylor Swift ticketing debacle, Blackburn had also urged the FTC to “get serious” about implementing enforcement of the bipartisan BOTS Act.

“The recent difficulties consumers have faced while attempting to purchase tickets is a serious concern and reflective of anti-competitive conduct in the online ticket marketplace,” Blackburn said in November 2022.

And last week, after it was reported the U.S. Department of Justice is going to investigate whether Ticketmaster and Live Nation have engaged in anti-competitive practices, Blackburn publicly lashed out at the companies, accusing them of continuing to allow bot scalpers to grab up large numbers of tickets that are being resold on the secondary market.

Ticketmaster, a primary ticket seller that also offers resale options like its competitors, declined to make someone available for an interview. But a spokesperson wrote in an email that the company “supports and shares information with regulators” and has pushed for resale limits.

Along with the FTC, the BOTS Act authorizes states' attorneys general to bring civil actions to enforce the law. The offices of eight attorneys general that responded to questions, including California, Michigan and Pennsylvania, weren’t able to identify a case they have brought under the federal law. It’s unclear whether there have been any cases filed by other state prosecutors under the BOTS Act.

The New York attorney general’s office pointed to settlements it reached in 2016 and 2017 with a dozen ticket brokers that were accused of violating state law by illegally using bots to obtain and resell tickets. They were each slapped with hefty fines and required to refrain from using bots under the settlements. (Those investigations were the result of investigations by the administration of former state Attorney General Eric T. Schneiderman.)

Still, at least three of those companies continued using the technology after the settlements were announced, and later were named in the 2021 BOTS Act case that is the only one on record as being enforced by the FTC.

The federal case, which was handled by the U.S. Attorney’s Office in Brooklyn, alleged that from January 2017 to September 2018, several Long Island-based brokers — Simon Ebrani of Cartisim Corporation, Steven Ebrani of Concert Specials, Inc., and Evan Kohanian of Just in Time Tickets, Inc. — used automated bot programs to reserve tickets on Ticketmaster’s website, later reselling them at a significant markup to generate about $26 million. 

They were not accused of crimes but agreed to civil sanctions without admitting wrongdoing. The settlements were filed in U.S. District Court in 2021. Court records show they purchased thousands of tickets from Ticketmaster and resold them for millions of dollars in profits. They were alleged to have bypassed Ticketmaster’s restrictions on users holding multiple accounts by “creating accounts in the names of family members, friends, and fictitious individuals, and using hundreds of credit cards.”

Federal prosecutors said the operators used ticket bots to trick the security systems in place to prevent “nonhumans” from purchasing online tickets. They also used programs to conceal the IP addresses of the computers they had used to make the purchases, so that the security system wouldn’t flag multiple purchases coming from the same locations.

Despite facing over $31 million in fines initially, they settled with the FTC for $3.7 million in penalties.

Simon Ebrani, Steven Ebrani and Kohanian did not respond to an interview request.

Capital Region residents, like many nationwide, often deal with overpriced ticket resales for the most anticipated concerts and events.

Resales for the April 15 Bruce Springsteen and the E Street Band concert at the MVP Arena in Albany reached as high as $12,832 on Ticketmaster’s website just hours before the show. Still, original-priced $433 tickets were also available on the platform, including those in the areas near the front of the stage. Single-ticket resale prices on Ticketmaster ranged from $418 to $834 for those sections.

On StubHub, resale prices for the same floor area were significantly higher, with four tickets in that section priced at $3,422, $4,802, and $4,970 around the same time.

Ken Lowson, one of three operators of Wiseguy Tickets, Inc., pleaded guilty in 2010 for using bot technology to buy and resell tickets. His company purchased nearly half of the available 440 general admission floor tickets for a 2008 Springsteen concert at the former Giants Stadium in East Rutherford, N.J., where Lowson claimed to have made $100,000 in a day at another nearby Springsteen show.

Starting as a scalper in 1998, Lowson bought tickets by phone as soon as they went on sale. He later acquired his first ticketing bot from a 17-year-old coder in Bulgaria. By using computers with unique IP addresses, he took advantage of identical CAPTCHA image combinations that aimed to distinguish between humans and bots. According to the FBI in Newark, Lowson and his partners bought about $1.5 million in tickets, reselling them at elevated prices to secure over $25 million in profits.

Initially facing a maximum five-year prison sentence and a $250,000 fine, Lowson was instead sentenced to two years of probation and 300 hours of community service after surrendering more than $1.2 million. His computer equipment also was seized.

Lowson, who runs a company teaching how to legally buy tickets for brokers to resell, said he’s seen politicians address the issue only when it’s in the news or facing public pressure because of an event like the one that involved Taylor Swift’s Eras tour.

“But then it dies down, and the news cycle goes around and it just gets worse,” Lowson said. “The difference between when I had my thing, and my case, it’s gotten, I promise you, five times to 10 times more expensive.”

Recent legislation in New York, along with proposals in states like California and Massachusetts following the Taylor Swift website crash, has mainly prioritized ticket price transparency over addressing bots or fraudulent scalpers.

When booking a seat on Ticketmaster for this month’s Springsteen concert in Albany, a message about the company’s “all-in pricing” policy would appear. Clicking “buy now” after selecting a location from an MVP Arena map displays the full ticket price, including the original “face-value” cost and service fees, which sometimes totaled hundreds or thousands of dollars.

The disclosures are the result of New York legislators approving updates to the state’s Ticketing Law in 2022, requiring companies to implement those all-in pricing policies.

State Sen. James Skoufis, a Democrat from Orange County and the law’s biggest proponent, pushed for rules to ensure residents know about a ticket’s total cost before completing a purchase, and mandating that ticket resale platforms clearly disclose the original ticket prices set by venues.

Additionally, the revised law more than doubled the maximum penalties to $2,500 for buying tickets with bot software and reselling them, but Skoufis called the change “largely inconsequential” without state or federal enforcement.